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 COMPANY be made liable in an action of deceit for an untrue statement in a prospectus, unless the plaintiff could prove that the director had made the untrue statement fraudulently. The Directors’ Liability Act enacts in substance that when once a prospectus is proved to contain a material statement or fact which is untrue, the persons responsible for the prospectus are to be liable to pay compensation to any one who has subscribed on the faith of the prospectus, unless they can prove that they had reasonable ground to believe, and did in fact believe, the statement to be true. Actions under this Act have been extremely rare, but it may have had the effect of making directors more careful in their statements. It has become very common of late years for a private trader to convert his business into a limited company, with a view not to offering the shares to the companies I)U^^C> but to securing the advantages incident to incorporation. Companies of this kind form one-third of the whole number of companies registered yearly, and are known as “ Private Companies,” to distinguish them from companies which appeal to the public to subscribe their capital. The special characteristic of the private company is not, however, the manner in which the capital is raised, but the fact that the shares are held in a few hands. The so-called “ one-man company ” is a variety of the private company. The fact that a company is formed by one man, with the aid of six dummy subscribers, is not in itself (as was at one time supposed) a fraud on the policy of the Companies Acts, but it is occasionally used for the purpose of committing a fraud, as where an insolvent trader turns himself into a limited company in order to evade bankruptcy; and it is to an abuse of the Act of this kind that the term “ one-man company ” owes its opprobrious signification. Companies Limited by Guarantee.—The second class of limited companies are those limited by guarantee, as distinguished from those limited by shares. In the company limited by guarantee each member agrees, in the event of a winding-up, to contribute a certain amount to the assets. The interests of the members of a guarantee company have no nominal value in money like the shares of other companies, a form of constitution which was designed, as has been stated by Lord Thring, who drafted the Companies Act, 1862, to give a superior elasticity to the company. The property of the company simply belongs to the company in certain fractional amounts. This makes it convenient for clubs, syndicates, and other associations which do not require the interest of members to be expressed in terms of cash. Companies not for Gain.—Associations formed to promote commerce, art, science, religion, charity, or any other useful object may, with the sanction of the Board of Trade, register under the Companies Act, 1862, with limited liability, but without the addition of the word “Limited,” upon proving to the Board that it is the intention of the association to apply the profits or income of the association in promoting its objects, and not in payment of dividends to members (C. A., 1867, § 23). In lieu of the word “Company,” the association may adopt as part of its name some such title as chamber, club, college, guild, institute, or society. The power given by this section has proved very useful, and many kinds of associations have availed themselves of it, e.g., medical institutes, law societies, nursing homes, and chambers of commerce. No such association can hold more than two acres of land without the license of the Board of Trade. Cost-Book Mining Companies.—These are in substance mining partnerships. They derive their name from the partnership agreement, the expenses and receipts of the

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mine, the names of the shareholders, and any transfers of shares being entered in a “cost-book.” The affairs of the company are managed by an agent known as a “ purser,” who from time to time makes calls on the members for the expenses of working. A cost-book company is not bound to register under the Companies Act, 1862, but it may do so. British Companies Abroad.—The status of British companies trading abroad, so far as Germany, France, Belgium, Greece, Italy, and Spain are concerned, is expressly recognized in a series of conventions entered into between those countries and Great Britain. Where no such convention exists the status of an immigrant corporation depends upon international comity, which allows foreign corporations, as it does foreign persons, to sue, to make contracts, and hold real estate, in the same way as domestic corporations or citizens; provided the stranger corporation does not offend against the policy of the State in which it seeks to trade. A company once incorporated under the Companies Act, 1862, cannot be put an end to except through the machinery of a winding-up, though the name of a company which is commercially defunct may be Vending struck off the register of Joint Stock Companies by the registrar under § 7 of the Companies Act, 1880. Winding-up is of two kinds: (1) voluntary winding-up, either purely voluntary or carried on under the supervision of the Court; and (2) winding-up by the Court. Of these by far the more common is a voluntary VoIuatary winding-up. Ninety per cent of the companies that come to an end are so wound up; and this is in accordance with the policy of the Legislature, evinced throughout the Companies Acts, that shareholders should manage their own affairs—winding-up being one of such affairs. A voluntary winding-up is carried out by the shareholders passing a special resolution requiring the company to be wound up voluntarily, or an extraordinary resolution to the effect that it has been proved to the shareholders’ satisfaction that the company cannot, by reason of its liabilities, continue its business, and that it is advisable to wind it up (C. A., 1862, § 129). The resolution is generally accompanied by the appointment of a liquidator. In a purely voluntary winding-up there is a power given by § 138 for the company or any contributory to apply to the Court in any matter arising in the winding-up, but seemingly by an oversight of the Legislature the same right was not given to creditors. This has now been rectified by the Companies Act, 1900, § 25. A creditor may also in a proper case obtain an order for continuing the voluntary winding-up under the supervision of the Court. Such an order has also the advantage of operating as a stay of any actions or executions pending against the company. Except in these respects, the winding-up remains a voluntary one. The Court does not actively intervene unless set in motion; but it requires the liquidator to bring his accounts into chambers every quarter, so that it may be informed how the liquidation is proceeding. When the affairs of the company are fully wound up, the liquidator calls a meeting, lays his accounts before the shareholders, and the company is dissolved by operation of law three months after the date of the meeting (C. A., 1862, §§ 142, 143). Irrespective of voluntary winding-up, the Legislature has defined certain events in which a company formed under the Companies Act, 1862, may be wound ^ *be up by the Court. These events are: (1) court. when the company has passed a resolution requiring the company to be wound up by the Court; (2) when the company does not commence its business S. III.— 23